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Next Hurricane Could Shut-In 40% Of Gulf Of Mexico Production
Although officials at Cheniere have declined to comment on plant operations, a report by Enverus Intelligence Research (EIR), a subsidiary of Enverus, has provided estimates that should a hurricane hit the Gulf of Mexico, ~40% of oil and gas production would be shut in and take seven days to recover in a mid-impact case estimates while a high-impact case would shut in as much as 90% of production and take 16 days to recover. Although Tropical Storm Hilary has been gradually weakening, it continues to flood parts of Mexico, California and the Southwest U.S. In more positive news, Cheniere has struck a deal with Germany’s BASF SE (OTCQX:BASFY) to supply the chemical giant with 0.8 million tonnes per annum (mtpa) of LNG to the chemicals giant. The BASF deal is one of several long-term supply deals Cheniere has signed so far this year. Back in June, Cheniere signed a long-term LNG sale and purchase agreement with China’s ENN Energy Holdings. Under terms of the deal, ENN will purchase ~1.8M metric tons/year of LNG on a free-on-board basis at Henry Hub prices for a 20-year term, with deliveries to commence mid-2026 ramping up to 0.9 million tonne per annum (mtpa) in 2027. Cheniere has also entered another LNG sale and purchase agreement with Norway’s Equinor ASA (NYSE:EQNR) that will see the Norwegian national oil company purchase 1.75M metric tons/year of LNG on a free-on-board basis for a purchase price indexed to the Henry Hub price, for a 15-year term.
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.
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